Round Hill, investor in Beatles and Bruno Mars songs, raises new fund

Round Hill Music Royalty Partners, a private equity firm which invests in the copyright of songs from artists such as The Beatles, The Rolling Stones and Bruno Mars, said on Tuesday it had raised $263 million for its second fund.

The fundraising is an example of private equity firms capitalizing on investor appetite for so-called alternative investments, such as wine and fine art, whose returns are, for the most part, not tied to the performance of financial markets.

“I think it’s fair to say what’s going on with music has very little to do with where the traditional markets are,” Round Hill Chief Executive Joshua Gruss said in a telephone interview.

Round Hill’s investors include traditional private equity investors such as insurance companies, endowments and family offices.

Since launching in 2012, Round Hill has put to work roughly $250 million and generated more than $60 million in royalty income, Gruss said.

The strategy is to acquire the publishing or recording rights to music and then pick up royalties when songs are played publicly, streamed online or covered by other performers.

One example is Chris Kenner’s song ‘Land of a Thousand Dances,’ which is featured in films such as “Forrest Gump.”

“We only own half of it and it earns about $200,000 a year… That is, I would say, a medium-sized song (revenue-wise),” Gruss said.

Last week, Round Hill said it had acquired Carlin Music, one of the largest of a few remaining independent music publishers in the world, with a catalog of more than 100,000 songs, including pop and rock classics such as ‘Are You Lonesome Tonight’, ‘Fever’ and ‘La Bamba’.

The deal was for $245 million, according to a source familiar with its terms who requested anonymity to discuss them.

Other similar private equity funds have launched in recent years. Kobalt Capital Ltd said last November it had raised its second fund to invest in music copyright, amassing $600 million through $345 million of equity commitments plus debt.